Merchant Risk and Weight Loss Scams

Weight loss scams come in all sorts of shapes and sizes – pun intended! In addition to causing consumer harm, these boondoggles lead to chargebacks, regulatory scrutiny, and brand-damaging publicity. Here at G2, we keep an eye out for all types of merchant risk, including the following:

Misleading Claims

The FTC warns third parties to be on the look-out for deceptive claims, including: “Take it off and keep it off. Kiss dieting goodbye forever!” and “Block fat before your body absorbs it. The pounds and inches will melt away.” Moreover, the agency routinely cracks down on companies that market weight loss products with false and misleading claims. For example, in 2017, the FTC settled a case against NutriMost LLC, which claimed that their “NutriMost Ultimate Fat Loss System” would help people lose 20 to 40 pounds in 40 days and treat or cure diabetes, psoriasis and more, all without a restrictive diet.

Tainted Supplements

Sometimes, products marketed as dietary supplements contain hidden – and dangerous – active pharmaceutical ingredients. For example, in January, the FDA issued a public warning about GoLean Detox, a weight loss product that was found to contain undeclared sibutramine and phenolphthalein. Sibutramine is a controlled substance that was formerly sold under the brand names Meridia (in the US) and Reductil (globally). In 2010, sibutramine was withdrawn from the market in many countries due to increased risk of heart attacks and stroke. Phenolphthalein, a laxative, was also withdrawn from the market because it was found to cause cancer.

Multi-level marketing – often used to sell weight loss products – can be a problematic business model where it violates the Federal Trade Commission Act, which prohibits “unfair or deceptive acts or practices in or affecting commerce.” The most high-profile example involves Herbalife, which was hit with a $200 million fine and forced to restructure its business.

If you would like to know more about G2’s Transaction Laundering Detection and Persistent Merchant Monitoring solutions, contact us at info@g2llc.com.